Your Home & Medi-Cal. When Your Home Is Exempt
This is an informative article from California Advocates for Nursing Home Reform (CANHR) on how your home and other assets impact Medi-Cal eligibility.
Medi-Cal eligibility requires that an applicant (and his/her spouse) have a limited amount of assets. Your home is exempt from consideration as a resource when you or your spouse is on Medi-Cal under any of the following circumstances:
- If during any absence, including nursing home stays, the beneficiary intends to return home, and states so in writing. If the beneficiary is mentally incapacitated, a family member or someone acting on her or his behalf may so state this intent.
- If the beneficiary’s spouse, child under age 21, or “dependent relative” continues to reside in the home.
- The residence is inhabited by the recipient’s sibling or son or daughter who has resided there continuously for at least one year prior to the date the recipient entered the nursing home.
- There are legal obstacles preventing the sale and the applicant/beneficiary provides evidence of attempts to overcome such obstacles.
- The home is a multiple dwelling unit, one of which is the principal residence of the beneficiary.
Exempt During Life, but Estate Claim After Death
Note that while a home may be “exempt” for Medi-Cal eligibility purposes, it may not be exempt from estate recovery. If the home is in your name when you die, the state may be entitled to make a claim against your estate to recoup the amount of certain Medi-Cal benefits paid.
Estate Claims Explained
For individuals who die before January 1, 2017, the old Medi-Cal Recovery laws will apply. If the home was still in the name of the Medi-Cal beneficiary at death, the State may make a claim against the estate of a beneficiary who was 55 years of age or older at the time he or she received Medi-Cal, or of any age, if the person received Medi-Cal in a nursing home, unless there is a surviving spouse, a minor child, or a blind or disabled child of any age.
For individuals who die on or after January 1, 2017, Medi-Cal Recovery claims have been severely restricted. The new recovery law:
- Prohibits claims on the estates of surviving spouses and registered domestic partners;
- Limits recovery for those 55 years of age or older to nursing home and home and community based services;
- Limits recovery to only those assets subject to probate under California law;
- Restricts the amount of interest that the state can charge on liens;
- Requires the state to waive the claim as a substantial hardship when the estate subject to recovery is a homestead of modest value, i.e., a home whose fair market value is 50 percent or less of the average price of homes in the county where the homestead is located; and
- Requires the state to provide a current or former beneficiary or their authorized representative a copy of the amount of the Medi-Cal expenses that may be recoverable.
Furthermore, the state can no longer recover for most basic health services such as doctor’s visits, prescription drug costs or managed care reimbursements – unless the services are related to nursing home care or Home and Community Based Services. Home and Community Based Services include the Assisted Living Waiver, Multipurpose Senior Services Program, In Home Operations Waiver, and Nursing Facility/Acute Hospital waiver programs.
Right to a Hearing
If you receive an estate claim, you may be entitled to have the claim waived. California has established notice and hearing procedures for waiver of estate claims if recovery would work an undue hardship.
Estate claims can be complicated, and the State has made many errors in their implementation. If you receive notice of an estate claim, contact your attorney, legal services office, or CANHR at 1-800-474-1116.
How to Avoid an Estate Claim
After January 1, 2017, only those receiving nursing home or home and community based services will have their estates subject to recovery. So, if you are receiving such services, estate planning is highly recommended to ensure that your estate will not be subject to probate and thus, subject to recovery. A number of low-risk estate planning mechanisms will now be available to avoid recovery, such as living trusts, joint tenancies, etc. A Medi-Cal recipient can also transfer any exempt property, including the exempt home, to anyone prior to death without impacting eligibility for Medi-Cal.
Transfer of Interest in Your Home
If you decide to transfer your home, we strongly suggest that you consult with an attorney experienced in Estate Planning for Long Term Care before any transfer is made. Real property transfers usually involve tax consequences, which may outweigh the benefits of the transfer.
Contrary to popular myth, there is no 30-month “waiting period” for transferring an exempt asset–even a home. In fact, under federal law, title to the principal residence may be transferred to the following persons at any time without affecting Medi-Cal eligibility:
- a spouse;
- a son or daughter under age 21 or who is blind or permanently disabled;
- a sibling who has equity in the home and who was residing there for at least one year immediately prior to the individual’s admission to a nursing home;
- a son or daughter who was living there for at least two years immediately prior to the individual’s admission to a nursing home and who provided care which enabled the parent to live at home;
- to anyone, so long as the home was exempt at the time of transfer.
Note: even if no one lives in the home, as long as the Medi-Cal applicant checks “yes” on the application concerning intent to return home, the home is exempt and can be transferred. If the home is transferred while the Medi-Cal beneficiary is alive, there is no estate claim on the home.
Transfer of the Home to a Spouse
The law allows transfer of a home to an at-home spouse without affecting Medi-Cal eligibility. This applies whether the transfer occurs prior to or after your spouse enters a nursing home.
If your spouse in the nursing home no longer has any interest in the home, anything you do with the house will not affect your spouse’s Medi-Cal eligibility. You can move out of the home, rent it, or sell it, all without affecting your spouse’s Medi-Cal eligibility.
However, there is an important timing issue here. For eligibility purposes, as an at-home spouse, you are only allowed to keep up to $120,900 in non-exempt assets (for 2017). If you sell the home before your spouse applies for Medi-Cal, the proceeds from the sale will count towards that limit, since cash is a non-exempt asset.
Thus, if you intend to sell the home, it is generally best to wait until after your spouse is on Medi-Cal and the home is in your name only. Once Medi-Cal eligibility is established, assets acquired by the at-home spouse are not counted.